Health dept opposes insurance for GP consultations

A brief estimates that expanding the scope of private health insurance coverage to cover “gaps” in GP visits that are not bulk-billed would result in an increase in premiums of 2 per cent a year for the first four years.
Photo: Virginia Star

Leaked advice from the federal Department of Health shows proposals to expand private health insurance to cover GP visits could cost the government up to $3.4 billion over five years, and warns of a two-tiered health system if the law is changed.

Private health insurers
Medibank
and
nib
have been pushing for a pre-election commitment from politicians on the change, and shadow health minister
Peter Dutton
has indicated he would be open to the move.

“It makes sense for insurers and governments to put every effort into keeping people out of expensive tertiary hospitals," Mr Dutton told The Australian Financial Review in April.

“It’s better for their health and it’s better for the taxpayer.

“If there are innovative ways in which we can provide support to people who are insured, we’d be happy to consider that," Mr Dutton said.

A confidential departmental briefing document, produced in 2008, estimates expanding the scope of private health insurance coverage to cover “gaps" in GP visits which are not bulk-billed would result in an increase in premiums of 2 per cent a year for the first four years, and cost the government an estimated $3.4 billion over five years.

It is currently illegal for private health insurance companies to cover doctor visits outside of hospital.

The department described the move as potentially creating “many perverse incentives" and “very expensive".

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The department warned of major flow-on costs to the Medicare Benefits Schedule, as GPs increased fees in response to the enhanced coverage. The cost of the private health insurance rebate would also increase by about $400 million over five years, according to the department’s modelling.

“While this measure would provide assistance to privately insured patients who are not bulk-billed, it would have the perverse effect of reducing the percentage of private insured patients who are currently bulk-billed as GPs sought to charge the maximum allowed by the private insurer for a full rebate," the advice says.

“The department does not support this idea. It could result in a two-tiered system with the privately insured receiving more favourable treatment than those who are not insured.

“It would also have upward pressure on premiums."

Private health insurers have argued that changing the law to allow for GP-visit coverage would ultimately result in savings for the government, as it would allow for more affordable access to primary care and let insurers intervene before an ill person reaches the far more expensive tertiary level of health care.

“It would improve the value proposition of health insurance and give us an opportunity to offer commercial encouragement for GPs to better care for our chronically ill," nib chief executive
Mark Fitzgibbon
said this month.

“I think it would give us vital information at the health insurer about our policyholders, which in the end allows us to help them better manage their health," Mr Fitzgibbon said.

The department’s advice estimates the private health insurers would benefit financially from the move, “open[ing] up [a] new market with likely corresponding increase in revenue".